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19th September 2023

The introduction of a universal basic income

Summary
On Tuesday 13 October 2020 at 9.30 am there will be a debate in Westminster Hall on “the
introduction of a universal basic income". The debate will be led by Ronnie Cowan MP, Neil Gray MP,
Clive Lewis MP and Layla Moran MP. A petition, entitled Implement Universal Basic Income to give
home & food security through Covid-19 was considered in an oral evidence session of the UK
Parliament Petitions Committee on 17 September 2020. In response to the petition, the UK
Government said a Universal Basic Income “does not target help to those who need it most”,
stressing additional support provided during the coronavirus outbreak, such as the Job Retention
Scheme and changes to Statutory Sick Pay and Universal Credit. The Senedd Cymru/Welsh
Parliament debated Universal Basic Income on 30 September 2020. The accompanying motion,
calling for the Welsh Government to establish a Universal Basic Income Trial in Wales, was passed by
the Senedd. A motion to campaign for a Universal Basic Income was also passed at the Liberal
Democrats’ annual conference in September 2020. The Commons Library previously published a
debate briefing on Universal Basic Income in 2016.

The House of Commons Library prepares a briefing in hard copy and/or online for most non-
legislative debates in the Chamber and Westminster Hall other than half-hour debates. Debate Packs
are produced quickly after the announcement of parliamentary business. They are intended to
provide a summary or overview of the issue being debated and identify relevant briefings and useful
documents, including press and parliamentary material. More detailed briefing can be prepared for
Members on request to the Library.

1. Policy Background
1.1 Universal Basic Income
Universal Basic Income (UBI) is a term used to describe a number of different proposals where the
state would provide income for all citizens, without any conditions attached, and regardless of their
other resources. The idea has a long history and has attracted supporters from across the political
spectrum at various times. There is some debate as to what constitutes a UBI. Some argue that it
should be adequate to live on and could replace current social security arrangements. Others push
for more limited schemes which would provide universal payments alongside the existing social
security system.1 The most common broad conception of a UBI scheme is one where universal
payments provide people with just enough money to live on. This was summed by Annie Lowrey in
2018:

“It is universal, in the sense that every resident of a given community or country receives it. It is basic,
in that it is just enough to live on and not more. And it is income.”

Both supporters and critics accept that full UBI schemes would be huge and society-transforming
undertakings. In this briefing we summarise the arguments put forward by advocates and opponents
of UBI schemes. We also outline a selection of international examples where some form of UBI has
been introduced.
1.2 Pros and Cons of UBI
Common arguments in favour
• A basic income should be a right of citizenship, providing material and psychological security
throughout life
• Changes to the labour market, particularly automation, may make UBI necessary
• National income can be better distributed through UBI in a context where an increasing proportion
of national income goes to capital rather than labour
• UBI could reward valuable non-wage labour such as caring and domestic work
• A full basic income replacing the social security system we have today would be simpler to
administer and easier to understand
• Government interference in people’s lives would be reduced through the removal of features such
as means-testing and conditionality
• An independent income stream gives workers freedom to choose other options, take
entrepreneurial risks and bargain from a position of power with employers
• UBI removes the risk of high withdrawal rates that claimants of means tested benefits can face as
they earn through work
• UBI would provide a quickly accessible infrastructure for comprehensive financial support during
crises (such as the current pandemic)

Common arguments against

The most common argument against UBI is cost. A Basic Income of £100 a week for each person
over the age of 16 in the UK, and £50 a week for each child, would cost around £314 billion a year.3
To put this in context, total spending on benefits, state pensions and tax credits in the UK was
forecast to be around £225 billion in 2019-20. 4 Payments at this level would nonetheless represent
a significant reduction in support for many households currently claiming benefits.
Other arguments against UBI include:
• It would require a huge shift away from established principles of contribution, targeting and
lifecycle distribution (linked to changing needs) in the existing social security system
• UBI would not target payments – unlike our current social security system which directs resources
towards those who are unemployed, face high housing costs, are parents, or who have disabilities
and long-term health conditions
• A UBI would have unavoidable trade-offs in terms of winners and losers. For example, in terms of
the level of payment, either;
─ It would pay at a level that creates few losers (in terms of benefit entitlement) compared to the
status quo, but at huge cost requiring higher taxes; or
─ It would pay at a lower level, resulting in a significant proportion of the people who currently claim
social security benefits losing out; or
─ It would pay at a lower level but sit alongside other targeted benefits – replicating or retaining the
complexity and problems of the current system
• It could undermine the responsibility of employers to pay wages that reflect living costs
• There are no conditions for receiving UBI, so it could reduce the incentive to work
• People’s identity and purpose is often tied up in paid work, so a system that facilitates a reduction
in labour force participation could have negative effects on wellbeing
• They money necessary to fund a UBI scheme would be more effectively spent elsewhere.

1.3 Recent research on UBI in the UK

In the UK, the most detailed work on UBI in recent years is probably the research undertaken as part
of the University of Bath Institute for Institute for Policy Research (IPR) research programme
Examining the case for a basic income. This looked in detail at the case for a UBI scheme and what
such a scheme might look like in the UK context.
A September 2017 IPR policy brief, Assessing the Case for a Universal Basic Income in the UK, looks
at the recent increase in interest in the idea of UBI schemes; takes an objective look at the core
issues relating to UBI’s desirability, surveying the existing theoretical and empirical literature on
UBI’s likely effects; assesses its feasibility as a realistic proposal in the UK; and considers various
options regarding policy design and implementation strategies. It also gives a review of existing
literature and secondary data, and the findings from further microsimulation work undertaken by
researchers at the Institute for Policy Research.
Pages 11-16 of the University of Bath policy brief give an overview of the findings from the (very
limited) experiments undertaken up to 2017. None of the experiments undertaken, however,
involved testing a full Universal Basic Income model, and such evidence as is available is of limited
value in assessing the case for a UBI in the UK (and indeed elsewhere), for the reasons set out in
pages 15-16.
The policy brief was the culmination of extensive research, seminars and workshops. Two earlier
reports from the research included:
• The Fiscal and Distributional Implications of Alternative Universal Basic Income Schemes in the UK
Money for everyone: The state of the Basic Income/Citizen’s Income debate, March 2017
• Exploring the Distributional and Work Incentive Effects of Plausible Illustrative Basic Income
Schemes, May 2017

1.4 Work and Pensions committee report on Citizen’s Income in 2017

On 28 April 2017 the House of Commons Work and Pensions Committee published a short report on
Citizen’s Income. 6 In light of recent interest in Citizen’s (or Universal Basic) Income as a possible
solution to many of the problems and uncertainties of the modern welfare state and labour market,
the Committee held a one-off oral evidence session at the University of Birmingham on 12 January
2017, during which it heard both sides of the arguments from an expert panel.
The Committee concluded that Citizen’s Income was a “distraction” from finding workable solutions
to welfare state problems, and urged the then incoming Government “not to expend any energy on
it.”
[…] CI may be an attractive idea on several counts. We convened a panel of experts to help us
understand the appeal of CI and its practical application. Ultimately, we were at a loss to understand
how CI could even partially resolve the issues it purports to address.
There are fundamental practical problems with implementing CI. A universal CI would simplify
welfare by replacing the existing benefit system. Yet providing an adequate unconditional income
for all would require prohibitive increases in taxation and may undermine incentives to work at all.
Some proponents of CI therefore suggest a more modest unconditional payment; CI would be paid
alongside some existing benefits to avoid creating substantial losses for claimants with, for example,
disabilities or high housing costs. Yet the complexity of such a system would undermine a key
argument for introducing CI, and leave the promises of income security and poverty reduction
largely unrealised. At best, we would end up with something very similar to Universal Credit.
There are significant challenges to overcome within the welfare system: ones that supporters of CI
rightly take an interest in addressing. But CI is not a panacea. Indeed, there are many problems to
which it is neither the optimal, nor even an appropriate, solution. CI risks being a distraction from
workable welfare reform. We urge the incoming government not to expend any energy on it.
Commenting on the publication of the report, the then Chair of the Work and Pensions Committee,
Frank Field MP, said:
"A universal Citizen’s Income would either require unthinkable tax rises or fail to deliver its objectives
of simplification and a guaranteed standard of living. There are problems in the welfare system, but
CI is not the solution to them. Rather it is a distraction from finding workable solutions."

1.5 International examples

There is no model of a permanent, state-wide, unconditional UBI (fitting Annie Lowrey’s the
description above) anywhere in the world today, although experiments and comparable schemes
have been trialled. A selection of these are described below.

The Finnish experiment

The most high profile experiment in recent years has been the Basic Income Experiment conducted
in Finland in 2017–2018. During the experiment, a total of 2,000 unemployed persons between 25
and 58 years of age received a monthly payment of €560, unconditionally and without means-
testing. The experiment was conducted by Kela – the Finnish Social Security Agency – and the final
results from the evaluation were published on 6 May 2020. The headline findings from the
evaluation were that there were small positive employment effects, and better perceived economic
security and mental wellbeing, for basic income recipients compared with the “control group” in
receipt of ordinary unemployment benefits. The Kela website summarises the findings:
The employment effects of the basic income experiment were measured for the period from
November 2017 to October 2018. The employment rate for basic income recipients improved
slightly more during this period than for the control group. However, the interpretation of the
effects of the experiment is made more complicated by the introduction of the activation model at
the beginning of 2018, which meant more stringent entitlement criteria for unemployment benefits
asymmetrically in both groups. During the first year of the experiment, when the activation model
had not yet been introduced, the basic income did not have any employment effects for the basic
income recipients at group level. All in all, the employment effects were small. The effects of the
basic income experiment on wellbeing were studied through a survey. Survey respondents who
received a basic income described their wellbeing more positively than respondents in the control
group. They were more satisfied with their lives and experienced less mental strain, depression,
sadness and loneliness. They also had a more positive perception of their cognitive abilities, i.e.
memory, learning and ability to concentrate. In addition, the respondents who received a basic
income had a more positive perception of their income and economic wellbeing than the control
group.
A total of 81 basic income recipients were also interviewed for the study. The interviews highlight
the diverse effects of the experiment and the differences in the starting points and life situations of
the basic income recipients.

The Utrecht experiment: Weten wat werkt (What Works)

A recently-concluded 16 month randomised control trial of different social security interventions in
the Netherlands looked at employment and wellbeing outcomes. Participants were randomly
divided into four different treatment groups. The trial included a group who received unconditional
benefits without further mandatory interventions, as well as additional financial work incentives and
more intensive interventions from caseworkers in other groups. The study found positive effects for
all the interventions it tested against the status quo.
For the group facing no conditionality, the key findings were:
• In the first months of the study, negative effects on labour market participation for this group
occured but disappeared towards the end of the study. Effects on a complete exit from benefits
could be distinguished from zero, but indicated a positive effect in the last month.
• It was striking that lower educated people clearly benefited more from Autonomously in action
[the name of the no-conditionality group] than intermediate and higher educated people. For lower
educated people, the chances of complete exit from benefits, a job of more than 12 hours per week
and a permanent contract increased. For intermediate and higher educated people, the approach
did not seem to have any effect.
• In the group Autonomously in action a shift took place with regard to the type of work contract
entered by participants. While participants in other groups mainly entered into temporary contracts,
in this group the percentage of participants with a permanent contract increased.
Further information can be found in the Utrecht University briefing, Final report What works (Weten
wat werkt) (1 May 2020).

The Permanent Fund Dividend in Alaska

Since 1982, the US state of Alaska has paid every citizen an unconditional dividend, largely out of
revenues from the state’s oil industry. In a study Looking at the PFD’s impact on employment,
University of Chicago academics Damon Jones and Ioana Marinescu found that the scheme had not
had a significant impact:
The unconditional cash transfer thus has no significant effect on employment, yet increases part-time
work…. In a world where trade, technology, and secular stagnation threaten people’s incomes, there
is growing interest in a universal basic income to promote income security. Our study of Alaska
contributes to our understanding of the likely impacts of a small universal basic income on the labor
market. Our results show that adverse labor market effects are limited, and, importantly, a small
universal and unconditional cash transfer does not significantly reduce aggregate employment.
The PFD has existed for 40 years, and proved popular enough that in the most recent gubernatorial
election in 2018, the winning candidate ran on a platform of increasing it significantly.
1.6 Coronavirus-related debate
The coronavirus pandemic prompted significant Government action to support household finances
as the country went into lockdown and sectors of the economy were closed. This, including the
“furlough” Coronavirus Job Retention Scheme and Self Employment Income Support Scheme, is
explored in our Commons Library briefing CBP8894, Coronavirus: Support for household finances.
Subsequent developments are covered in Commons Library briefing CBP-8973, Coronavirus:
Withdrawing crisis social security measures (updated 25 September 2020).
During the crisis advocates of UBI have made their case, including members from across the House –
such as the Conservative Edward Leigh, Alison Thewliss from the Scottish National Party, Ed Davey
from the Liberal Democrats and Labour’s Beth Winter. These arguments have often relied on the
difficulties governments face providing a universal and watertight safety net through traditional
policy instruments.
The Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA), long time
supporters of UBI, argued for an “emergency basic income.” This would provide support for the
selfemployed people and others who might have been missed out by the then proposed schemes.
Responding to calls for UBI, Torsten Bell, the Chief Executive of the Resolution Foundation and early
advocate of some of the policies such as the Job Retention Scheme subsequently adopted by the
Government, argued that introducing UBI would take time and finite state capacity to implement.
He added that calls are “misguided given the pace of what is happening.”

The Conservative Party position on UBI

The flagship social security policy of the contemporary Conservative party has been Universal Credit.
The case for Universal Credit8 was made with some of the same goals UBI proponents claim today –
increased simplicity through replacing multiple benefits with one and removing financial
disincentives to work created by high and uneven withdrawal rates as claimants earn more.
However, Universal Credit also strengthened some principles – means testing and conditionality –
that UBI seeks to remove or diminish.
Commitment to these principles, as well as worries about cost, form the basis of contemporary
Conservative resistance the idea. The coronavirus crisis has given the Conservative Government
multiple opportunities to reject calls for UBI. It has done so not only on the grounds of practicality,
but also on principle.
On 4 May this year, in response to a suggestion from Neil Gray MP in the House of Commons that
the Government replace its existing coronavirus support schemes with “a far simpler universal basic
payment with a longer view towards basic income”, the Secretary of State for Work and Pensions
Thérèse Coffey said:
There is a variety of analysis on universal basic income. The latest report I saw estimated it would
cost over £400 billion a year. It is not targeted at the poorest in society and is not an appropriate way
for us to try to distribute money. Instead, our schemes are focused on making sure that the poorest
do get help.
A parliamentary written answer on 29 June 2020 on the feasibility of implemented a model of UBI in
the UK stated that “Universal Basic Income is extremely expensive, reduces work incentives and
does not target those most in need of support”.
The Labour Party
In recent years most advocates of Universal Basic Income have been on the left of the political
spectrum. Contemporary supporters of UBI can be found in many of Labour’s aligned interest groups
and in the trade union movement.
Recent Labour Party leaderships have also been more open to the idea than the Conservatives, but
have stopped short of promising to introduce a basic income. Former Shadow Chancellor John
McDonnell commissioned Guy Standing, an Economics Professor and prominent basic income
supporter, to write a report proposing and pilot of basic income in the UK. The report was published
in May 2019, and the subsequent Labour General Election manifesto promised a pilot:
we will explore other innovative ways of responding to low pay, including a pilot of Universal Basic
Income.
Jonathan Reynolds, the Shadow Secretary of State for Work and Pensions since April 2020, wrote in
2016 about how he “learnt to stop worrying and love basic income.” However, since becoming
Shadow Secretary of State, the approach to UBI has become more equivocal. The Labour front bench
did not join calls for a crisis Basic income in response to the coronavirus pandemic. Quoted in a 30
July 2020 interview with LabourList, Mr Reynolds said, however, that he remained interested in UBI:
I like benefits that aren’t means-tested. I think something that is genuinely comprehensive and
universal and open to everyone is clearly a plus.
However, he added that it is “not a magic bullet” and the need to provide additional support for
people with disabilities and with housing costs meant that basic income would need to be a
“component of the system”.

The Liberal Democrat Party

There have been advocates for UBI in the Liberal Democrat Party, and before it the Liberal Party, for
some time. The party developed its own proposal for a Citizen’s Income in 1990, although these
were subsequently dropped in 1994.13 During the coronavirus pandemic there has been a
resurgence in interest, with Liberal Democrat politicians expressing support for the introduction of a
form of Universal Basic Income which the party recently endorsed at its conference in September
this year.
Whilst a candidate for the leadership of the party (and as acting leader), Sir Ed Davey argued in April
during a debate in the Commons that:
Economic policy must tackle Britain’s unequal society, so exposed in this crisis, including the poor pay
of people in the care sector, the problems with the universal credit system and the low levels of
statutory sick pay. All these problems show that we must do far more to increase social justice in our
country, and I believe that they show that we should look more seriously at proposals for a universal
basic income.
On 29 July, he set out proposals for a new ‘Sovereign Wealth Fund’ to finance a new UBI scheme.
Under this plan, firms unable to pay back their government-backed loans, or who believed
repayments would hinder their growth, would be able to exchange the debt for shares which could
be used to fund UBI once the business recovered. 15 This, he argued, would “help the most
vulnerable, who too often slip through our byzantine welfare state, from the homeless to young
people starting out” and that it would “recognise the crucial work of millions of unpaid carers in our
society”.
At the Liberal Democrat conference on 25 September, the party passed a motion committing it to
“campaign for a Universal Basic Income, paid to all long-term UK residents”, to be “funded in a
socially just and equitable manner to create a fair social security system for all”. The party’s Federal
Policy Committee will work further on the details of implementation. Announcing the passage of this
motion, newly-elected party leader, Sir Ed Davey, argued:
Trials of UBI have suggested it can improve mental health, financial wellbeing, and boost people’s
confidence. It can properly value carers and caring for the first time and in practice can be a huge
boost to the incomes of many women in particular. It can act as a second safety net for those in
difficulty, for the most marginalised who fall through the current complicated system.
We never know what’s around the corner. Coronavirus has shown us just how fragile our system is,
and how easily it can fail people. From shielding people from another global crisis to rewarding
informal caring, we need a system which prioritises social and economic resilience for individuals and
for our country.
UBI is a huge step towards the fairer society we, as liberals, should champion. I couldn’t be prouder
that so many Liberal Democrats today voted to fix our broken system.

The Scottish National Party

The Scottish National Party (SNP) has become more vocal in its support for the implementation of
UBI across the UK, and in Scotland in particular, during the course of the coronavirus pandemic.
During Prime Minister’s Questions on 18 March, before the Government announced the Coronavirus
Job Retention Scheme, Ian Blackford MP, leader of the SNP at Westminster, expressed support for a
temporary UBI to support people during the crisis and called on the Government to “provide people
with the security of a universal basic income”.
Responding to a Reform Scotland report which recommended proposals for a Basic Income
Guarantee to support people through the coronavirus crisis in early April 2020, the First Minister of
Scotland, Nicola Sturgeon, noted that she had “long been interested in [the] concept of UBI” and
that the coronavirus crisis “strengthens the case immeasurably”. She noted that the Scottish
Parliament does not currently have the powers to introduce such a scheme in Scotland, but
expressed hope that there could be a “serious discussion” with the UK Government on its
implementation.
At Prime Minster’s Questions on 22 April, Mr Blackford announced that the SNP was “leading a
cross-party call for a universal basic income to finally protect everyone” and to “help to ensure a
strong economic recovery and a fairer society”.
In an article for The House Magazine on 28 April, the SNP Spokesperson for Business, Energy and
Industrial Strategy Drew Hendry MP argued that “Universal Credit has never been enough to support
families”, and that a UBI scheme would support people during the coronavirus crisis, as well as “get
us through the recovery phase as we strain our collective muscle to get our economy working
again”. He argued that UBI would support the economic changes brought about by increased
automation of traditional workplaces and the subsequent effect on the labour market. He further
suggested that it would provide “a platform for more productivity – removing low-level risks around
entrepreneurship and new small business development”.

The Green Party

The Green Party of England and Wales has for several years been in favour of introducing a UBI
scheme. It published a proposal for a ‘Basic Income’ in advance of the 2015 General Election, and in
November 2019 announced a proposal for a “fully costed Universal Basic Income for every resident
by 2025”. Under these most recent proposals, all benefits aside from Housing Benefit and Carers
Allowance would be incorporated into the new payments for every adult of “at least £89” per week
(with additional payments for those who face barriers to working), to be phased in over five years.
The Party has reiterated its calls to introduce UBI during the coronavirus crisis. Its co-leader,
Jonathan Bartley, argued in early May this year that “[i]t’s clear that only universal and unconditional
protection ensures that nobody is left behind”, and that:
Universal basic income says proudly that each of us is deserving of a dignified life, whether or not we
are deemed economically productive especially when that toil is often in a pointless job which serves
to make men like Richard Branson even richer while driving our climate off a cliff.
More recently, Caroline Lucas MP noted that some people (particularly the self-employed and
freelancers) had struggled during the crisis to access adequate support, and called on the
Government to adopt UBI to protect people’s incomes during the coronavirus crisis:
There is a simple and effective way to start to put things right and a universal basic income delivered
via a welfare system that lifts everybody up would be a key cornerstone of that lifts everybody up
would be a key cornerstone of that.